Updated: Jun 11, 2022
By Paul Bergeron
March 23, 2022 at 07:56 AM
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The flood of capital in this sector is fueling plenty of momentum.
The recent onslaught of build-for-rent (BFR) homes makes it a new, booming asset class, according to John Burns Consulting.
More than half of the 651 build-for-rent (BFR) communities in its database (51%) were built in the past five years and more than one-quarter (27%) were built in the past two years.
This represents a boon to the housing supply-starved nation. However, more supply is needed and according to an analysis by John Burns Consulting, it is on its way.
“Based on the build-for-rent consulting assignments we’ve completed in the past four years we are highly confident that supply will increase dramatically,” wrote the firm’s Danielle Nguyen.
Build-for-rent operators are actively buying land across the country, according to its Residential Land Broker Survey.
“Many of these BFR operators are competing for the same lots both public and private builders are also bidding for, particularly on higher density parcels,” according to Nguyen. “The build-for-rent share of land purchased has grown over the course of the last couple years, as a flood of capital and rising single-family rents drive demand for development sites.
“With the backdrop of anemically low resale supply, as well as for-sale new home supply, we are monitoring growth of the build-for-rent (BFR) market to help alleviate the housing shortage.”
Southeast, Southwest Getting Much of the Action
Areas, where BFR operators are buying land most actively, are in the Southeast (9% to 14% of lots) and the Southwest (10% to 11% of lots).
“Public builders are also pursuing single-family rental and build-for-rent despite a hot for-sale market,” Nguyen wrote. “They are building entire communities for rental operators, selling one-off homes to operators, or building, renting and then selling the homes themselves.”
As home prices continue to soar (even in a rising mortgage rate environment), BFR will add much-needed rental supply to the very low inventory environment the country is experiencing, according to the firm.
“Given the need for additional space and the increase in working from home, build-for-rent homes give consumers the ability to live in a newly built home, while enjoying the benefits of amenitized communities and flexibility to move.”
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